Regional LNG: Chevron, CNOOC say still in Gorgon LNG talks
Thursday, July 7 2005 - 03:45 PM WIB
The U.S. oil major said on Thursday the delay in finalising the deal to supply LNG to China was not related to a takeover battle between CNOOC and Chevron for U.S.-based oil and gas producer Unocal Corp.
"We are still in ongoing negotiations on the Gorgon gas project with CNOOC," David Samson, U.S.-based spokesman for Chevron, said.
The Australian newspaper, citing unnamed Gorgon officials, reported on Thursday that state-run CNOOC had pulled out of the negotiations to buy 80 million-100 million tonnes of liquefied natural gas (LNG) over 25 years, because the price was too high.
Asked about the report, a CNOOC spokesman said: "CNOOC continues to negotiate in good faith in relation to the Gorgon venture in accordance with all aspects of the existing MOU.
Scott Walker, an Australia-based media adviser for Chevron, described the deal as big and complex, adding "we are not speculating about an end-point to these discussions".
Officials dismissed speculation that CNOOC's $18.5 billion takeover bid for Unocal, which topped a $16 billion offer from Chevron, had complicated the Gorgon deal or added to delays.
"We don't think (our bid for Unocal) will affect our relationship," CNOOC's Chief Financial Officer Yang Hua told Reuters by phone from Beijing.
A memorandum of understanding (MOU) covering the supply deal and a 12.5 percent equity stake CNOOC plans to take in the A$11 billion Gorgon LNG development expired in March, but officials had said since then that talks were ongoing.
The A$30 billion agreement signed in October 2003 was hailed as Australia's biggest-ever export deal, beating a A$25 billion deal CNOOC signed with Australia's only LNG producer, the North West Shelf, the previous year.
The North West Shelf deal was for 82.5 million tonnes of LNG to be supplied over 25 years to China's first LNG terminal.
Chevron, a 50 percent stakeholder and operator of the Gorgon project off the coast of Western Australia, had initially hoped to turn the MOU into a firm deal by the end of last year, but cited the deal's complexity as the reason for the hold-up.
Project officials then set the end of the first quarter as the likely timeframe to wrap up the deal and in May officials said a realignment of equity stakes to take into account a reorganisation of fields to be included in the project, was holding things up.
The only firm agreement the Gorgon partners have secured is one with 25 percent stakeholder Royal Dutch/Shell , under which Shell agreed to sell its entire share of Gorgon gas to an LNG terminal off North America from 2010.
The joint venture is also marketing the gas to Japan and South Korea, the world's top two importers of LNG.
The Greater Gorgon Area contains 40 trillion cubic feet of gas resources, or about one-quarter of Australia's proven and probable gas reserves.
U.S.-based Exxon Mobil Corp. has a 25 percent stake in Gorgon.(*)